10 Year Treasury Auction Results
CIGA Eric
It’s not a problem until it has been recognized as such.
10 Year bond auction results continue reflect the trend towards increased anonymous participation. It’s called direct bidding.
While PR focuses on the window dressing of stimulus retraction, it ignores potential for infinite QE behind anonymous closed doors.
Source: treasurydirect.gov
Notes From Underground: It’s all Greek 24/7 (sorry about that)
By Yra Harris
Being that we were all over the Grrek debt issue for the last two months, we find the present infatuation to be laughable. But the power of news to drive trading volatility is something we have to respect. For the last three days, the markets have been to and froed by the headlines generated by the most recent speaker. The power to inflict pain by headline-driven gyrations certainly keeps traders on their toes. We always caution our audience to decide whether you are a trader or an investor because that distinction will certainly determine your time horizon. It is so interesting to listen to the talking heads comment on the photos of civil servant strikes in Greece as if this is something newsworthy. Our only response to these purveyors of popular myths who can’t report process is the Gil Scott-Heron song, “The Revolution will not be Televised.”
From the European Union comes one report after another about the possibilty of a bailout of the peripheral EU members. We caution to take whatever the lastest European bureaucrat says with a grain of salt. We are steadfast in our belief that the European situation will be resolved politically and going forward has little or nothing to do with economics. The financial world has already analyzed the balance sheet ramifications, but the politics have yet to be determined. The only thing that we can add about all the statements that cross the newswires emanates from Henry Wotton[1568-1639]: “Ambassadors are honest men sent abroad to lie for their countries.”
A quick response to Bernanke’s speech: Nothing new in it but probably gives some solace to the hawks, but this has been a rehash of earlier speeches.We still caution that the FED moves are based on models and have yet to be determined in practice about the real impact. Trying to make sense out of an unbalanced world … oh well, back to snow removal.
One-Fifth of U.S. Homeowners Owe More Than Properties Are Worth
CIGA Eric
More than a fifth of U.S. homeowners owed more than their properties were worth in the fourth quarter as the number of houses and condominiums lost to foreclosure climbed to a record, according to Zillow.com.
Bank sales of foreclosed properties accounted for a fifth of all U.S. home sales in December, Zillow said. Such transactions made up 68 percent of sales in Merced, California; 64 percent in the Las Vegas area; and 62 percent in Modesto, California, the company said.
More than 20% U.S. homeowners owe more than their properties are worth.
20% of all U.S. home sales in December were bank sales of foreclosed properties.
Combine this with what lumber futures are telling us.
How much of the Fed’s stimulus reduction plan talk? Household balance sheets dictate the infinite QE will not end in a controlled, policy directed manner.
Source: bloomberg.com
Bernanke outlines plan for pulling in stimulus aid
CIGA Eric
In prepared remarks to a House committee, Bernanke says the Fed will likely start tightening credit by boosting the interest rate it pays banks on money they leave at the central bank. Consumers and companies would then have to pay more to borrow.
- The market, not the Fed, sets short-term rates. The Fed has the choice to either listen or ignore them. If the Fed chooses to ignore, short-term spreads will widen (cause and effect). Widening spreads will intensify dislocation created by money flows adapting/playing those spreads, thus, causing unintended consequences. That is a dangerous choice to make in an already fragile credit environment.
- If the stimulus brakes are applied as suggested, the sum drained would be meaningless in terms QE, both official and unofficial, already injected.
- Let’s not forget, that there’s a big difference between talk of and actual withdrawal.
Jim,
Well, well, well. After all that F-TV jawboning about the end of Bond purchases by the BoE, now we find out it may not end at all.
Who was it that said QE will never end?
Respectfully,
CIGA Pedro
King Says ‘Far Too Soon’ to Call End to BOE Bond Plan (Update1)
By Scott Hamilton
Feb. 10 (Bloomberg) — Bank of England Governor Mervyn King said it’s “far too soon” to say officials will make no new purchases through the bond program as the central bank forecast inflation will undershoot its target over the next two years.
Bond yields fell after the remarks, which came less than a week after the bank paused the program at 200 billion pounds ($313 billion). Policy makers today also cut their forecast for economic growth. Inflation will peak at about 3.3 percent before slowing as low as 0.9 percent and staying below the goal of 2 percent, the forecasts showed.
“It is far too soon to conclude that no more purchases will be needed,” King told reporters in London at the Bank of England’s quarterly press conference. “The committee will keep its options open, and further purchases will be made if they prove necessary to keep inflation on track to meet the target in the medium term.”
Dear Pedro,
The financial propaganda machine never sleeps. The dumbed-down financial public sleeps as a matter of habit 24/7.
Once a statement is made the majority think that is what is. It is like revisions of data. That has little impact on the financial public so it is a major MOPE tool.
The rub is that even if the general public is asleep and does not give a damn, the economic implications of the event are in the system. That causes a coil effect so that when it hits the fan like Lehman, it is nuclear.
In truth it is QE to infinity or the Fed is history.
Regards,
Jim
Jim,
China seems to have decided to cut foreign companies from its huge local market.
"The idea that China was one day going to be a lucrative market for foreign companies was just an illusion" is the conclusion of the article.
This is definitely not good for Western companies.
Best regards,
CIGA Christopher
Dear Christopher,
It might be a good idea if the entire West considered a HALT of the China bashing, because China does not critically need the West no matter how much the F-TV flag wavers scream.
The West needs their bankers, China.
China is in the process of developing a huge internal consumer base as well as cheap excellent technology that the West will have a hard time competing with.
The West in their egomaniac selves cannot accept this as few accepted in 1995 that Asia would rise as the West declined. Boom, a book written by myself and Frank Vogl cover this in depth.
Regards,
Jim
UK businesses threaten to pull out of China over protectionism
Senior business leaders complained in interviews with The Daily Telegraph that they were operating in the worst conditions they had seen for decades.
By Malcolm Moore in Shanghai and Peter Foster in Beijing
Published: 10:13PM GMT 09 Feb 2010
Beijing – UK businesses threaten to pull out of China over protectionism.
Faced with regulations that are often impossible to meet and a climate of overwhelming protectionism, many said they are now openly considering whether to leave the world’s biggest market.
"We are bracing ourselves for departures this year from UK businesses, some of which are starting to question the economics of continuing to do business in China," said one diplomatic source. He added that the insurance and financial services sectors were particularly angry as profits and market share failed to materialise in the face of regulatory obstruction.
However, almost every sector has been hit by new requirements that aim to force foreign companies out and boost the country’s domestic players.
In the wake of Google’s decision to stand up to the Chinese government, other firms have complained of a witch-hunt against foreigners that has targeted British, American and European companies with intellectual property theft, blocked market access, rigged tender processes and the deliberately inconsistent enforcement of regulations.
